Most commodities rallied last week d by buoyant manufacturing data in China and the eurozone and in volatile trade with many markets winding down for the long Easter weekend. The price of New York crude oil soared above 85 dollars per barrel, hitting a 17-month peak on a wave of positive investor sentiment about the global economic outlook.
"Sentiment across the whole commodity complex is very upbeat, with very good eurozone manufacturing PMIs today and exceptionally strong Chinese PMIs," said VTB Capital analyst Andrey Kryuchenkov. He added that the oil had jumped higher "in very thin (trading) volumes" ahead of the holiday weekend and was aided by the weak greenback, which tends to lift demand for dollar-priced goods.
Manufacturing in the eurozone defied forecasts in March, hitting a 40-month high, according to a sector survey released Thursday by data and research group Markit. The 16-nation euro currency bloc's purchasing managers' index (PMI) for the manufacturing sector, published by Markit, rose 2.4 points from February to 56.6 points in the month of March.
It is the sixth consecutive month in which the index has stood above the 50-point barrier, which signals a growth in manufacturing activity. There was also positive news from the manufacturing sector in China, which is a major consumer of raw materials. Chinese manufacturing picked up in March, government and HSBC surveys showed Thursday, with the bank saying it could indicate an accelerating economy and raise chances of an interest rate hike.
OIL: Crude prices hurtled to 17-month high points, nearing October 2008 peaks. "Prices have started the second quarter with a bang, with both New York crude and Brent currently trading at their highest for the year, and in fact, their highest levels since October 2008," said Barclays Capital analysts. New York crude spiked as high as 85.22 dollars and London Brent oil hit 84.33 dollars on Friday.
"Decent data around the globe have offered a positive backdrop," added analysts at Sucden Financial Research. "Funds (which) have been reported as getting out of the oil market recently... have also been reported as re-entering the oil market today, at the start of a new quarter."
Oil had also rallied sharply on Wednesday, driven by a weaker dollar, before paring gains on a report which showed a larger-than-expected build in US crude stocks. A weaker dollar which makes dollar-priced commodities like oil cheaper for buyers using other currencies.
Analysts said this week's gains were buoyed by an International Energy Forum meeting that pledged greater co-operation and more transparency in tackling oil price volatility, seen as damaging to economic recovery. "With regard to energy market volatility, energy markets should be as transparent as possible," the International Energy Forum said at the end of a two-day meeting in Cancun.
It also agreed to strengthen dialogue between leading oil producers, such as Saudi Arabia and Russia, and key consumers including the United States and China, in a bid to eliminate the risk of excessive price swings. Oil had surged to all-time peaks of above 147 dollars a barrel in July 2008, before the severe global economic downturn saw them crashing to just 32 dollars.
Producers and consumers blame the volatility on financial speculators and a lack of accurate data on nations' oil inventory levels. Crude futures have steadily recovered since late 2008, trading in recent months between 70 and 80 dollars - a level deemed acceptable by producers and consumers.
By late Thursday on the New York Mercantile Exchange, Texas light sweet crude for delivery in May jumped to 84.88 dollars compared with 79.82 dollars on Friday of the previous week. On London's IntercontinentalExchange, Brent North Sea crude for May delivery rallied to 83.96 dollars from 79.05 dollars on Friday of the previous week.
BASE METALS: Base or industrial metals roared higher as traders welcomed the upbeat manufacturing data. The "strong Chinese PMI data should go some way to allaying concerns about the short-term metals demand outlook," Barclays Capital analysts noted.
The HSBC China Manufacturing PMI rose to 57 last month after falling to 55.8 in February, when the indicator was likely affected by the Lunar New Year holiday. A separate official PMI published by the China Federation of Logistics and Purchasing (CFLP) rose to 55.1 after slipping to 52 in February. A reading above 50 means the sector is expanding, while a reading below 50 indicates an overall decline.
By Thursday on the London Metal Exchange, copper for delivery in three months rallied to 7,908 dollars a tonne from 7,512 dollars on Friday of the previous week.
-- Three-month aluminium rose to 2,354 dollars a tonne from 2,230 dollars.
-- Three-month lead increased to 2,210 dollars a tonne from 2,110 dollars.
-- Three-month tin grew to 18,670 dollars a tonne from 17,750 dollars.
-- Three-month zinc fell to 2,417 dollars a tonne from 2,246 dollars.
-- Three-month nickel increased to 25,550 dollars a tonne from 23,650 dollars.
PRECIOUS METALS: Gold and other precious metals rose in line with other raw materials. "The strong economic optimism that prevailed during the past several weeks resulted in a gold price performance," said Commerzbank analyst Carsten Fritsch.
By Thursday on the London Bullion Market, gold leapt to 1,123.50 dollars an ounce from 1,096 dollars on Friday of the previous week. Silver rallied to 17.69 dollars an ounce from 16.85. On the London Platinum and Palladium Market, platinum soared to 1,660 dollars an ounce from 1,596 dollars. Palladium rose to 491 dollars an ounce from 458 dollars.
COCOA: Cocoa prices crept higher. By Thursday on Liffe, the price of cocoa for delivery in May increased to 2,261 pounds a tonne from 2,210 pounds on Friday of the previous week. On the NYBOT, the May cocoa contract firmed to 2,984 dollars a tonne from 2,869 dollars.
COFFEE: Coffee prices continued their upwards trajectory after hitting a three-year trough two weeks ago. By Thursday on Liffe, Robusta for delivery in May rose to 1,394 dollars a tonne from 1,344 dollars on Friday of the previous week. On the NYBOT, Arabica for May firmed to 137.70 US cents a pound from 137.15 cents.
SUGAR: Sugar prices fell. Barclays Capital analysts said the market was hit by "better weather supporting stronger level of supplies in Brazil, and upward revisions to Indian production estimates". By Thursday on the New York Board of Trade (NYBOT), the price of unrefined sugar for delivery in May tumbled to 15.53 US cents a pound from 17.15 cents on Friday of the previous week. On Liffe, London's futures exchange, the price of a tonne of white sugar for May slid to 469.40 pounds from 481 pounds.
GRAINS AND SOYA: Grains and soya prices softened. By Thursday on the Chicago Board of Trade, maize for delivery in May dipped to 3.45 dollars a bushel from 3.56 dollars on Friday of the previous week. May-dated soyabean meal - used in animal feed - dropped to 9.36 dollars from 9.52 dollars. Wheat for May was down to 4.54 dollars a bushel from 4.64 dollars.